LOWELL, Mass. — (BUSINESS WIRE) — September 28, 2011 —
SofTech, Inc. (PK:
SOFT),a proven provider of Product Lifecycle
Management (“PLM”) solutions, announced the following update on its
corporate activities since its last announcement on June 13, 2011. The
Company previously announced a recapitalization transaction in March
2011 (the “Recapitalization Transaction”).

“I am very pleased to announce that we have filed an amended
Registration Statement with the Securities and Exchange Commission
(“SEC”) and included therein audited financial statements for fiscal
year 2011,” said Joe Mullaney, the CEO since March 11, 2011. “The audit
completion and the filing represent a major step forward towards again
becoming a fully reporting public company.”

The full year operating results and condensed balance sheet information
presented below include the impact of the Recapitalization Transaction
and the previously announced sale of the Company’s AMT product line for
approximately $413,000. The results of the AMT product line have been
reflected as discontinued operations in the financial statements.

The Recapitalization Transaction resulted in two unusual Q4 entries:

the Company’s former lender accepted $2.75 million in cash and a note
for $250,000 in full satisfaction of approximately $10.6 million then
due resulting in debt forgiveness of approximately $7.6 million. Given
the former lender’s 44% ownership of the Company prior to the
Recapitalization Transaction, this debt forgiveness was recorded as an
additional contribution of capital rather than income; and

the Company’s former lender paid bonuses of $540,000 to the CFO and
the former CEO upon completion of the Recapitalization Transaction
under a contractual arrangement entered into in July 2010 directly
between those parties. Given the lender’s financial interest in the
Company these payments were recorded as Company expenses and as an
additional capital contribution by the lender.

In addition to the above, the Company incurred the following expenses
related to professional fees during fiscal 2011:

$365,000 of professional and advisory fees between June 2010 and
December 2010 exploring various alternatives to resolve the debt
default with the former lender; and

$142,000 of professional and advisory fees from December 2010 to March
2011 that culminated in the Recapitalization Transaction.

Lastly, the Company incurred cash outlays of an additional $467,000
related to debt acquisition and stock issuance costs. Debt acquisition
costs were capitalized and will be amortized over the three year loan
period and stock issuance costs were netted against the proceeds from
the sale of stock in stockholders’ equity.

“The Recapitalization Transaction represents a significant event in the
40-year history of SofTech. It was expensive, time consuming and
complex. With that event now behind us and the audit for fiscal year
2011 completed we can move forward to focus on profitable growth and
creation of shareholder value,” Mullaney added.

The Registration Statement referred to above relates to the Company’s
private placement in March 2011 as part of the Recapitalization
Transaction. Pursuant to the registration rights agreement with the
investors in the private placement, the Company is obligated to register
the possible resale, from time to time, of the shares so purchased by
the investors. Such resales cannot occur until after the Registration
Statement is declared effective by the SEC. The investors in the private
placement have selected a fixed offering price of $5.00 per share by
which to offer their shares for sale under this Registration Statement
until such time as the SofTech shares are listed on the Over the Counter
Bulletin Board or an exchange. The Company will not receive any proceeds
from any sales by the selling stockholders. In connection with the
effectiveness of the Form S-1 Registration Statement, the Company
expects to file a Form 8-A with the SEC registering its common stock
under Securities Exchange Act of 1934 (the “Exchange Act”) and, at that
point, will again be required to file periodic and other reports under
the Exchange Act.

Fiscal Year Ended May 31, 2011 Operating
Results & Financial Position

Mullaney continued:

“The combination of the non-recurring expenses related to evaluating the
various alternatives following the debt default, the transaction related
expenses related to the Recapitalization Transaction, the
reclassification of the financial statements to present the results of
the AMT product line as discontinued operations and the disruption
caused by the aforementioned activities have made the fiscal year 2011
operating results very difficult to understand. A few key measures of
improvement are:

Improved working capital position by more than $10 million;

Reduced annual debt service from $2.5 million to $1.1 million for FY
2012;

Reduced FY 2012 interest expense from approximately $600,000 to
approximately $240,000;

May 31, 2011 cash on hand of $1.6 million; and

Ended the fiscal year with stockholders’ equity of $1.1 million, the
first time in a decade the stockholders’ equity has not been in a
deficit.